Key Insights
- Cryptocurrency market loses $270 billion in value, with Bitcoin falling 11% to $54,000 and Ethereum’s Ether dropping 21%.
- Crypto selloff coincides with broader equity market declines, including a 7% drop in Japan’s Nikkei 225 and Nasdaq entering correction territory.
- Despite the downturn, institutional interest in crypto grows with SEC-approved ETFs and Morgan Stanley planning to offer Bitcoin ETFs to clients.
NEW YORK (MarketsXplora) – The cryptocurrency market suffered a significant setback on Sunday, shedding approximately $270 billion in value as investors continued to offload risky assets amid a broader downturn in global equities.
Bitcoin, the world’s largest cryptocurrency, plummeted 11% in the past 24 hours to around $54,000, its lowest level since February. Despite the sharp decline, bitcoin still maintains a 23% gain for the year. Ethereum’s ether, the second-largest digital currency, experienced an even steeper fall of 21%, erasing its year-to-date gains and trading at approximately $2,300.
The crypto selloff coincided with a sharp decline in Asian equity markets, particularly in Japan, where the Nikkei 225 dropped as much as 12%. This extended losses from the previous week following the Bank of Japan’s decision to raise its benchmark interest rate to a 16-year high.
“The correlation between crypto and traditional risk assets remains strong,” said Alex Chen, a crypto market analyst at Digital Asset Research. “As we see global equities struggle, it’s no surprise that cryptocurrencies are facing similar headwinds.”
In the United States, the tech-heavy Nasdaq composite slid 3.4% last week, entering correction territory and marking its worst three-week stretch since September 2022. Tech giants Amazon and Nvidia contributed significantly to the index’s decline.
The broader market downturn has been attributed to a combination of factors, including disappointing corporate earnings, a weaker-than-expected U.S. jobs report, rising unemployment, and a declining manufacturing sector. The U.S. Federal Reserve’s decision to hold interest rates steady, without promising a rate cut in September, has also dampened investor sentiment.
Other major cryptocurrencies were not spared in the selloff. Binance’s BNB token fell more than 15%, while Solana dropped 10%.
The crypto market’s volatility comes at a time of increasing mainstream adoption. Earlier this year, the U.S. Securities and Exchange Commission (SEC) approved new spot exchange-traded funds (ETFs) for both bitcoin and ether, allowing a broader base of investors to gain exposure to these digital assets.
“The approval of crypto ETFs has been a double-edged sword,” noted Sarah Thompson, chief strategist at Blockchain Capital. “While it’s increased accessibility, it’s also made the crypto market more susceptible to broader market sentiment.”
In a sign of growing institutional interest, Morgan Stanley is reportedly planning to allow its 15,000 financial advisors to offer bitcoin ETFs to clients, marking a first for Wall Street.
“The coming week’s economic data and policy decisions could be pivotal for both traditional and crypto markets,” Chen added. “We’re in a period of heightened sensitivity to macroeconomic factors.”
